Shareholders bless marriage of Granges and Da Capo

After several months of courting, shareholders of Da Capo Resources (DCX-T) and Granges (GXL-T) have voted overwhelmingly to tie the knot.

The new company, Vista Gold (VGX-T), will have 100.7 million fully diluted shares outstanding, no debt and US$20 million in working capital once the merger is approved by authorities.

“This is going to be a balanced mining company, with a solid profile of exploration projects,” says outgoing Da Capo president Ross Beaty, who will become Vista’s vice-chairman.

The new company’s assets will include Granges’ Hycroft mine in northern Nevada and the Guariche development project in Venezuela, as well as Da Capo’s Bolivian projects, including the Amayapampa-Capa Circa development project and the Copacabana, San Gerardo and India properties. (The San Gerardo is 48% held by Teck).

Last year Hycroft produced 101,128 oz. gold at a cash cost of US$272 per oz., and 417,832 oz. silver. The mine has reserves of 58.8 million tons grading 0.019 oz gold, and production for 1996 is projected to be 120,000 oz. gold.

Beaty, who will also be Vista Gold’s largest shareholder, with 9% of shares, says the new company will be “Latin American-friendly.”

By 1999, Vista hopes to have 3 million oz. of gold reserves, three operating gold mines producing 300,000 oz. gold annually, and a 32% reduction in cash production costs.

“I believe we have one of the most undervalued gold stocks on the market,” outgoing Granges president Michael Richings told the Da Capo meeting.

Holders of Granges shares will receive one common share of Vista for each Granges share, and Da Capo shareholders will receive two Vista shares for each Da Capo share.

The formal vote came one day after Da Capo released new results from its San Gerardo and Copacabana properties.

At San Gerardo, hole 29 intersected 115.4 metres grading 1.08 grams gold per tonne, including 37.6 metres grading 1.67 grams gold. Hole 30 intersected a widespread interval of anomalous gold. Da Capo says the results confirm the large size of the mineralized system on the property, defined to date by 30 drill holes over an area measuring 850 by 400 metres, including results of 54 metres at 5.54 grams in hole 18 and 31 metres at 3.22 grams in hole 6.

At 100%-held Copacabana, Da Capo received results from five of nine holes drilled by reverse circulation along a 1,000-metre surface trace of a swarm of gold-bearing quartz veins.

Hole 3 returned 92 metres grading 2.97 grams gold; hole 3 returned 32 metres at 0.46 gram; hole 5 intersected 28 metres at 5.27 grams and bottomed in mineralization; hole 6 hit 4 metres at 1.32 grams, also bottoming in mineralization; and hole 7 returned 40 metres grading 1.57 grams.

“I think we’ve discovered an economic orebody,” Beaty said. “These are good numbers and we’re excited. We have the opportunity to build the two largest open-pit mines in Bolivia in the near future.”

At the Amayapampa and Capa Circa properties, a final feasibility study is under way, including a major drilling program, metallurgical studies and infrastructure, permitting and environmental work.

Amayapampa has 6.2 million tonnes of reserves grading 2.54 grams gold, whereas Capa Circa has 27.6 million tonnes grading 1.21 grams.

Officials hope to make a production decision by April of next year, with startup envisaged for July 1998. The open-pit Amayapampa mine is expected to process 3,000 tonnes per day, while underground Capa Circa will process 200 tonnes per day, producing, in total, 100,000 oz. per year. The gravity-flotation- cyanide leach mill will have a capacity of 3,200 tonnes per day, with 90-92% recovery.

Capital costs will be US$62 million, and the cash operating cost is projected at US$140 oz.